It’s time pay inequality became a priority

Darren Johnson, a Green Party member of the London Assembly, asks: Should we give equal priority to income inequality and tackle the pay of people at the top, in the belief that reducing the income gap will lead to economic, social and environmental justice? And can we find we right policies to achieve this?

Darren Johnson AM represents the Green Party in the London Assembly

Most economic analysis on Left Foot Forward focuses on our traditional concern with the poor and on the public services that help them. We tackle poverty by promoting the London Living Wage and building social housing, health inequality by improving the NHS and reducing deadly air pollution, and so on.

But should we give equal priority to income inequality and tackle the pay of people at the top, in the belief that reducing the income gap will lead to economic, social and environmental justice? And can we find we right policies to achieve this?

I am hosting a debate tonight to grapple with those questions in City Hall, working on behalf of a city with the starkest inequality of any region in the UK.

I represent Londoners earning the minimum wage who can’t make ends meet in London, stuck a full seven thousand pounds below the “low wage threshold” that is usually defined as two thirds of the median wage. The intense concentration of wealth has even left young people on incomes that make them better off than 88 per cent of the UK population eligible for “affordable housing”, because they might struggle to buy market housing.

Our comfort zone is to get more workers onto the London Living Wage, which has put millions into the pockets of low paid workers, and to build more housing in the hope that supply might get closer to demand.

But adherents to The Spirit Level argument suggest we need to think more about the people at the top of the income scale, because a smaller gap between the bottom and the top will lead to a healthier and happier city with less crime, better education results and so on.

Even in a society with excellent public services and a decent quality of life for all, a huge gulf between the bottom and the top would cause the society to suffer from a range of problems.

That income gap has grown in the past few decades, particularly in the 1980s. In 1918 the richest 1% earned 19% of all income; by 1980 that had fallen to only 6% and 4% after taxes, while living standards improved markedly; but by 2005 this had risen back to 16%.

What can we do to tackle excessively high pay? As a regional politician with relatively few powers, the Mayor of London cannot introduce progressive taxation aimed at pulling down the income of top earners; he cannot reform company structures or require public disclosure of pay. Nor can our local councillors.

When I proposed a motion to introduce fair pay ratios into the Greater London Authority group, I hoped this would help us rein in the massive pay awards given to top staff in Transport for London and Crossrail; when I have pressed him the Mayor has shown little enthusiasm for implementing this, despite his support for the principle.

But would I be better spending my time scrutinising the pay of GLA staff at the bottom of the pay scale, employment brokerage schemes for the unemployed and action to insulate fuel-poor homes? Should the Spirit Level argument really change our priorities?

I think it should, and I’m looking forward to the debate in the hope that we can identify policies clearly based on evidence, not envy.

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